Section 143

Section 143 — the law in short

What the courts have decided on section 143, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT v Abhisar Buildwell P Ltd Supreme CourtCuts both ways
  Search assessment for a year already completed, but nothing incriminating was found. Can the officer still add?
  No — not under s.153A. For completed or unabated assessments the addition must rest on incriminating material found in the search. But the Court preserved the department's power to reopen those years under ss.147 and 148 instead.
• Genpact India Pvt Ltd v DCIT Supreme CourtHelps department
  The Assessing Officer has fastened buy-back tax under s.115QA on my company. Do I have a right of appeal, or must I go to the High Court by writ?
  You have a right of appeal. The Supreme Court held that a determination of liability under s.115QA is covered by the words 'an order against the assessee, where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a), so an appeal lies; and because that remedy exists, the High Court was right to refuse a writ petition.
• P.R. Metrani v CIT Supreme CourtHelps taxpayerSuperseded by amendment
  Can papers seized in a search be presumed true against me in the regular assessment?
  That was not the law as this case decided it: the s.132(4A) presumption operated only within the search proceedings and not in a regular assessment under s.143. Parliament changed that by inserting s.292C in 2007. What survives from this judgment is that the presumption is rebuttable and that seized documents can still be used as ordinary evidence even without it.
• Tin Box Company v CIT Supreme CourtHelps taxpayer
  The AO never heard me but the CIT(A) did. Does the appeal cure the defect?
  No. Failure to follow the principles of natural justice at the assessment stage cannot be made good in an appeal. Once it is found that the officer did not give the assessee a proper opportunity of hearing, the assessment order is to be set aside and the matter remanded to the officer for a fresh assessment after a proper opportunity.
• Modi Industries Ltd v CIT Supreme CourtCuts both ways
  My assessment was reduced in appeal and more advance tax turned out to be excess. Does section 214 interest run to the date of the revised assessment?
  No. The Supreme Court, resolving a conflict that had divided almost every High Court, read regular assessment in section 214 as the first assessment order made by the Income-tax Officer under section 143 or section 144. Interest under section 214(1) therefore runs from 1 April following the financial year to the date of that first assessment, and the excess is measured against the tax determined by it, not against the tax as reduced later in appeal or revision. Excess tax thrown up by an appellate or revisional order is dealt with by the refund provisions instead, in particular section 244(1A).
• Rajinder Nath v CIT Supreme CourtHelps taxpayer
  An appellate order in my firm's case said the officer is free to assess the amount in the partners' hands. Does that lift the limitation bar for assessing me?
  No. The Supreme Court held that the words finding and direction are limited in meaning. A finding must be one necessary for the disposal of the particular case, of the particular assessee and for the particular year, and directly involved in that disposal; an incidental finding will not do. A direction must be express, necessary for the disposal, and within the power of the authority making it. Saying the officer is free to take action leaves the matter to his discretion and is not a direction at all. Section 153(3)(ii) does not enlarge jurisdiction; it only raises the bar of limitation.
• CIT v Vegetable Products Ltd Supreme CourtHelps taxpayer
  The provision can be read two ways. Which reading wins?
  Yours. Where two reasonable constructions of a taxing provision are possible, the one favourable to the assessee must be adopted. Applied here to hold that penalty is computed on tax payable after credit for amounts already paid.
• Bannanje Grahakara Vividhoddesha Sahakara Sangha Ltd v CIT (Appeals), NFAC High CourtCuts both ways
  The Tribunal remanded the nominal member issue to the Assessing Officer but recorded findings on the merits while doing so, leaving the officer nothing to decide. Is there anything I can do about that in the High Court?
  Yes. The Karnataka High Court declined to interfere with the order of remand itself, but accepted that the Tribunal's observations on the merits might prejudice the assessee and clarified that the remand proceedings are to be considered independently, uninfluenced by any observations or findings recorded by the Tribunal on merits, strictly in accordance with Mavilayi Service Co-operative Bank and having regard to the relevant provisions of the Karnataka Co-operative Societies Act.
• Marmo Home v DCIT ITATCuts both ways
  If I did not appeal the s.143(1) intimation, can I attack the same adjustment in the appeal against the s.143(3) order?
  The Tribunal rejected the argument that a s.143(1) intimation merges into the later s.143(3) assessment order. It held that the appealable orders listed together are independent of each other, so an adjustment made at the processing stage had to be challenged in an appeal against the intimation and could not be revived in the appeal against the scrutiny assessment.
• Dixit Rice Mill v DCIT (CPC) ITATCuts both ways
  Must an assessee first apply for rectification to CPC before appealing against a s.143(1) intimation?
  CPC made adjustments in a s.143(1) intimation without giving the assessee an opportunity, and the CIT(A) dismissed the appeal on the footing that the assessee should have applied online for rectification first. The Tribunal held that an appeal lies to the CIT(A) against a s.143(1) intimation and that there is no requirement in law to approach CPC for rectification before appealing.
• CBDT Instruction No. 03/2017 — the demonetisation cash verification SOP CBDT Circulars & InstructionsCuts both ways
  Is there a departmental instruction telling the officer how to verify my demonetisation cash deposits, and what comparisons is he supposed to make?
  Yes. The Board issued a Standard Operating Procedure on 21 February 2017 for the online verification of cash deposits made in the demonetisation window. It fixes deposit levels at which no further verification is to be made — up to 2.5 lakh for an individual without business income, and Rs. 5.0 lakh for a person above 70 — and it lists the comparisons an officer is to run before treating recorded cash sales as back-dated, the first of which is an abnormal jump in cash sales for November and December 2016 against the assessee's own earlier history.
• Statutory position — s.171: the fiction that a family assessed as undivided continues until a finding of partition is recorded, the s.171(3) order, and what the Explanation means by "partition" CBDT Circulars & InstructionsCuts both ways
  Our family divided years ago and each of us has been showing his own income since. The Assessing Officer has issued a notice to the HUF for those very years and says the HUF is still alive. Can he do that when we have actually separated?
  Yes, unless and until a finding of partition has been recorded under s.171. Section 171(1) creates a fiction: a Hindu family hitherto assessed as undivided is deemed for the purposes of the Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under the section. The machinery is s.171(2) and (3) — a claim made at the time of an assessment under s.143 or s.144, an inquiry after notice to all the members, and a finding recorded by the Assessing Officer as to whether there has been a total or partial partition and the date on which it took place. Severance of status is not enough: the Explanation defines "partition" as a physical division of the property where the property admits of a physical division, and expressly provides that a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.